Post GST supply hiccups not to hit festive season, says Shoppers Stop MD Govind Shrikhande

By: | Published: August 10, 2017 6:25 AM

Shoppers Stop expects apparel priced above Rs 1,000 to cost more by about 4%- 6% later in the year as retailers might pass on the increase in tax via GST to customers, Govind Shrikhande, managing director, Shoppers Stop told Jharna Mazumdar.

 GST,  gst hiccups,  Shoppers Stop MD Govind Shrikhande, GST newsGovind Shrikhande, managing director of Shoppers Stop.

Shoppers Stop expects apparel priced above Rs 1,000 to cost more by about 4%- 6% later in the year as retailers might pass on the increase in tax via GST to customers, Govind Shrikhande, managing director, Shoppers Stop told Jharna Mazumdar. In contrast, food items could become cheaper with firms passing the benefits of lower tax post GST. Shrikhande says there have been supply challenges post GST but the problems will be ironed out before the festive season.

Do you propose to pass on changes in prices to customers?

Post GST , there have been supply challenges and we are expecting things to settle down before the festive season. Our omni channel execution is on track to be ready by Q3 FY18. At Hypercity many of the food items have zero per cent tax and we are passing the benefits to customers for our private labels. Hindustan Unilever too has reduced prices on certain products and other FMCG companies too are expected to do the same. At Shoppers Stop most of the brands have seen a price increase post GST as apparel above Rs 1,000 is being taxed at 12%.

While no price increases have been taken, the cost of these could go up by 4% to 6% in two tranches later in the year. Since there is no octroi duty anymore, transportation of goods is easier.

What are your expansion plans in FY18? Did you shut any stores in Q1FY18?

We have shut 1 Shoppers Stop store in FY18 and 1 Hypercity in Pune. We have re-sized one Hypercity store in Thane to 50,000 sq ft from earlier 80,000 sq ft and another store in Hypercity store in Hyderabad we have reduced by 10,000 sq ft.

We plan to renovate 8 Shoppers Stop in the next two quarters. Also we plan to add five Shoppers Stop stores in FY18. At present there are 80 Shoppers Stop stores (including six airport stores) operational in 38 cities. HyperCity-Currently has 19 stores, spread over an area of 13.32 lacs sq. Besides, the company operates HomeStop and specialty stores such as Crossword, Mothercare, Estee Lauder, Clinique, Bobbi Brown and MAC. Shoppers Stop presently operates more than 58.46 lacs sq ft of space across formats.

What is your growth projection for FY18?

With a good monsoon and the early arrival of festive season from August this year we expect the next quarter sales will be strong. In Q1FY18 Shoppers Stop’s net loss narrowed to Rs 3.45 crore compared to net loss of Rs 13.56 crore reported in Q1FY17. Shoppers Stop witnessed like-to-like sales growth of 19.8% in Q1FY18 while like to like sales growth of Hypercity in Q1FY18 was 2.4%. EBITDA in the quarter was up 22% to Rs 32 crore while the margin was 3.1% similar to that in Q1FY17.

What is your net debt as of June 30? Any plans to reduce debt?

The net debt as of June 30 was Rs 492 crore and reduced by Rs 45.9 crore compared to last year. We continue to look at reducing our debt further.

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